New JerseyS3881220th Legislature (2024-2025)SenateWALLET

Amends lists of environmental infrastructure projects approved for long-term funding by DEP under FY2025 environmental infrastructure funding program.

Sponsored By: Rosaura Bagolie (Democratic), David Bailey Jr. (Democratic), James Beach (Democratic), Nilsa I. Cruz-Perez (Democratic), Gabriel Rodriguez (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

17 provisions identified: 16 benefits, 0 costs, 1 mixed.

Financing for Sandy and flood resilience

DEP can provide up to $300 million total in Sandy financing loans for listed clean water projects. Projects serve Sandy-affected communities or address flood risk, disaster vulnerability, or resilience to rapid changes in water conditions. Financing must follow the Federal Disaster Relief Appropriations Act. DEP can reduce individual amounts when projects fail the law's compliance or financing requirements.

Loan relief for replacing lead pipes

Drinking water systems meeting state affordability rules can get loan forgiveness for replacing lead service lines under the state program. Funding includes up to $51 million, specified unused fiscal year 2024 funds, and up to $60.3 million in federal funds. Tier 1 systems can receive up to 80% forgiveness, capped at $16 million per system. Tier 2 systems can receive up to 50%, capped at $10 million per system. Without available forgiveness funds, loans carry interest at 20% of the New Jersey Infrastructure Bank's market rate.

More financing options for water systems

DEP can use federal grants, specified state balances, unused appropriations, repayments, and interest for listed water projects, technical help, and required state matching funds. Zero-interest and forgivable loans remain subject to available funds and federal and state law. Within federal limits, DEP can shift money between clean water and drinking water revolving funds to address health threats or financing needs. The Infrastructure Bank can receive up to $25 million from the fiscal year 2024 $60 million drinking water appropriation, plus specified 2021–2023 funds, to invest in projects, back debt, or pay sponsors' interest. The law took effect immediately; many funding authorities ran through June 30, 2025, and projects had to execute loans by July 1, 2025, to keep their entitlement.

Water project help for disadvantaged communities

Disadvantaged communities in the Water Bank technical assistance program can receive planning and design grants for water projects. The law allows up to $60 million in grants, capped at $2 million per applicant. Disadvantaged communities in DEP's technical assistance program can also receive construction loan forgiveness for clean water or drinking water projects. That separate pool allows up to $60 million, capped at $2 million per applicant, using fiscal year 2025 and specified 2021–2023 funds. DEP can also transfer up to $5 million from fiscal year 2025 water construction funds to support technical assistance.

Affordable loans for clean water projects

Clean water projects meeting state revolving fund affordability rules can access up to $40 million in loan forgiveness. Designated unused fiscal year 2024 funds are also available. Tier 1 borrowers receive full forgiveness on costs up to $3 million; Tier 2 borrowers receive it on up to $2 million. Costs above those limits, and projects without available forgiveness, carry interest at 25% of the Infrastructure Bank's market rate.

Affordable loans for drinking water upgrades

The law authorizes up to $40 million in federal loan forgiveness for drinking water projects meeting DEP's affordability rules. Projects addressing lead or emerging contaminants are excluded from this allocation. One $20 million pool can fully forgive loans up to $10 million for qualifying projects among DEP's highest-ranked projects. Another $20 million pool can fully forgive up to $4 million for Tier 1 borrowers or $2 million for Tier 2 borrowers. Qualifying projects without available forgiveness receive loans at 25% of the Infrastructure Bank's market rate.

Cheaper construction loans for sewer overflows

The law provides up to $20 million in forgiveness, plus designated unused fiscal year 2024 funds, for sewer overflow construction. Projects must serve a combined sewer overflow drainage area and reduce or stop overflow outfall discharges. When practical, forgiveness is capped at $5 million per borrower. For costs above $5 million through $10 million, half is forgiven; the rest carries interest at 50% of the Infrastructure Bank's market rate. Costs above $10 million, and loans without available forgiveness, carry interest at 25% of that rate.

Cheaper water restoration and efficiency projects

Water quality restoration gets up to $10 million in forgiveness, with a $2.5 million borrower cap when practical. Water and energy efficiency projects meeting federal Green Project Reserve guidance get up to $18 million, with a $2 million borrower cap when practical. Both pools also include designated unused fiscal year 2024 funds. Half of costs up to $5 million for restoration, or $4 million for efficiency, is forgiven; the balance carries interest at 50% of the Infrastructure Bank's market rate. Higher costs, and loans without available forgiveness, carry interest at 25% of that rate.

Debt relief for safer drinking water

Up to $20 million in federal American Rescue Plan funds, plus specified unused fiscal year 2024 funds, supports drinking water loans. Projects must improve long-term climate resilience or install treatment for multiple maximum contaminant level violations at one system. Systems using the treatment option must meet DEP's affordability rules. For project costs up to $25 million, 80% of principal is forgiven; the rest carries interest at 50% of the Infrastructure Bank's market rate. Costs over $25 million carry interest at 25% of that rate.

Loan relief for small water systems

Drinking water systems serving up to 10,000 people can access up to $7 million in loans, plus specified unused fiscal year 2024 funds. This allocation caps total forgiveness at $1 million; forgiveness also cannot exceed 50% of a loan or $2 million per sponsor. Project costs above $2 million receive financing at 25% of the Infrastructure Bank's market rate. A separate allocation provides up to $6 million for systems serving fewer than 1,000 people. Loans from that allocation receive full forgiveness.

Loan relief for stormwater resilience projects

Projects improving stormwater resilience can access up to $9 million in forgiveness plus up to $11 million in federal American Rescue Plan funds. The program forgives 80% of principal. The balance carries interest at 50% of the Infrastructure Bank's market rate. Without available forgiveness funds, loans carry interest at 25% of that rate.

More affordable sewer overflow cleanup loans

Projects meeting clean water affordability rules can access up to $30 million in forgiveness, plus designated unused fiscal year 2024 funds. Projects must serve a combined sewer overflow drainage area and reduce or stop overflow outfall discharges. Tier 1 borrowers receive full forgiveness on costs up to $8 million; Tier 2 borrowers receive it on up to $7 million. Costs above those limits, and projects without available forgiveness, carry interest at 25% of the Infrastructure Bank's market rate.

More aid for sewer control projects

Listed long-term sewer control projects get up to $30 million in forgiveness, plus up to $50 million in federal American Rescue Plan funds and specified unused fiscal year 2024 funds. Construction must reduce or stop listed outfall discharges within a combined sewer overflow drainage area. These loans receive 80% forgiveness; the balance carries interest at 50% of the Infrastructure Bank's market rate. Separately, up to $2 million in forgiveness, plus designated unused fiscal year 2024 funds, supports sewer or stormwater projects qualifying for DEP's Sewer Overflow and Stormwater Reuse grants. Fully forgiven loans cover up to 20% of those projects' eligible costs, and the grant finances the rest.

Updated water projects get loan access

The law updates the Sandy and fiscal year 2025 clean water eligibility list, naming sponsors and estimated loans. It also authorizes supplemental zero-interest financing for Rutgers University and Somerville Borough projects: $6.05 million in estimated total loans, including $4.5375 million from DEP. Supplemental financing for East Orange City and National Park Borough totals an estimated $3 million, including $2.25 million from DEP. These supplemental loans cover differences between final allowable costs and previously certified amounts, including increased allowable costs, within listed limits and available funds. They take priority over the respective main clean water and drinking water project lists and remain subject to statutory compliance requirements.

Water loan repayments back infrastructure bonds

Beginning January 30, 2025, the Infrastructure Bank can use specified loan repayments before returning them to designated funds. Use is limited to securing authorized infrastructure bonds and covering bank administrative fees, with State Treasurer approval and legal safeguards. If repayments cover a shortfall, the bank must restore the fund using money from or for the responsible project sponsors. Specified federal disaster funds, DEP transfers, and earnings also fund bank reserves, limited to amounts its chair certifies as needed.

Water systems get contaminant cleanup relief

Clean water projects primarily addressing emerging or re-emerging risks to health, aquatic life, or the environment get a forgiveness pool of up to $18 million. When practical, costs up to $10 million receive full forgiveness. Drinking water projects primarily addressing emerging contaminants get a separate pool of up to $34 million. Those loans can receive full forgiveness, capped at $2 million per applicant. Costs above the applicable limits, or loans without available forgiveness, carry interest at 25% of the Infrastructure Bank's market rate.

Water project loans can rise or fall

DEP can set its share of covered project loans from 0% to 100% of the allowable total. At 100%, terms follow the construction certification and bank interim-financing year; without an interim loan, fiscal year 2025 terms apply. Beginning January 30, 2025, loans can rise or fall with final or low-bid costs, within estimated allowable totals. Adjustments of up to 10% can cover costs tied to DEP guidance on asset management, emergency response, flood protection, or backup power. DEP can also add qualifying interim-loan interest to program totals and raise forgiveness limits when extra funds exist, but can reduce aid under statutory reduction authority or for project noncompliance.

Sponsors & Cosponsors

Cosponsors

Mitchelle Drulis
Democratic • House
Dawn Fantasia
Republican • House
Roy Freiman
Democratic • House
Michael Inganamort
Republican • House
Sumter, Shavonda E.
Affiliation unavailable

Roll Call Votes

All Roll Calls

Yes: 110 • No: 0

House vote • 12/19/2024

3RDG FINAL PASSAGE

Yes: 72 • No: 0 • Other: 1

Senate vote • 12/19/2024